Facebook is about to have 4 different billion-user platforms

Despite intensifying competition among social photo/video sharing
platforms, user growth on Facebook's
(NASDAQ:FB) Instagram is actually
accelerating. Instagram announced today that it has now
reached 700 million monthly active users, noting that "the last
100 million of you joined faster than ever." For the record, the
service had previously hit 600 million in December 2016, so it
added 100 million users in just over four months. It took roughly
six months to garner the previous 100 million users, and nine
months for the 100 million before that.

The user base has now doubled over the past two years, and it's
well on its way to hitting 1 billion. When that eventually
happens, Instagram will become Facebook's fourth billion-user
platform.

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Fourth time's the charm?

Facebook's core platform hit 1 billion users in October 2012,
just months after going public. The next platform to cross the
10-digit threshold was WhatsApp in February 2016, which was
followed shortly by Messenger in July 2016. It goes without
saying that the core Facebook ad platform has been paying the
bills all these years, but Instagram is different than WhatsApp
and Messenger in arguably the most important way: monetization.

Monetizing free messaging platforms is generally a tricky
proposition, and one that remains a work in progress for Facebook
(including both Messenger and WhatsApp). There are some outlines of the strategy here:
connecting businesses with consumers, facilitating e-commerce
transactions with AI bots, adding an ad carousel. There's a lot
of potential and it's very likely just a matter of time before
Facebook hits its target, but the strategy here is neither fully
baked nor certain to succeed.

In contrast, building the Instagram ad platform is far more
straightforward, and something Facebook has plenty of experience
in. While in messaging, Facebook needs to come up with a strategy
and execute amid uncertainty, the company already knows
the route it'll take with Instagram and just needs to focus on
executing a familiar strategy. There are now over 1 million active
advertisers on Instagram. Instagram Stories is already taking
off, and now has over 200 million people using
it on a daily basis, less than a year after launch.

Mark Zuckerberg has often said that 1 billion users is a key
threshold to begin monetization. For example, in 2014 Zuckerberg
said, "Products don't really get that interesting to turn into
businesses until they have about 1 billion people using them,"
referring to when Facebook would start earnestly working on
building WhatsApp as a business. But given Instagram's
fundamentally greater financial potential as an ad platform, it's
a far more important service to get to 1 billion than messaging
services. It's also not as if Facebook waited for Instagram to
hit 1 billion before cranking up the monetization.

If user growth rates hold steady or continue to accelerate,
Instagram looks on track to hit 1 billion users by late 2017 at
best or early 2018 at worst.

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